Policies to promote rural electrification

through renewable energy

2

Extending electricity access: Business as Usual

Source: Based on IEA data

Trends in population without access to electricity and clean cooking facilities under business-as-usual and 2030 target scenario

1990 2012 20300

200

400

600

800

1000

1200

1400

Without electricity access (BaU) Without electricity access (Target)

Mill

ion

3

Diversifying approaches: Off-grid technology

Nearly 60% of additional generation required to achieve universal electricity access by 2030

is estimated to come from off-grid installations (stand-alone and mini-grids)

Electricity access for all

Source: IEA, UNDP, UNIDO (2010)

Off-grid renewable energy technologies: An opportunity

www.costing.irena.org

LCOE ranges and averages

Stand-alone solutions

• Modular in nature• Customised to local needs and capacity• Rapid deployment• Cost-effective replacement for kerosene-based lighting

Challenge: Tapping into this massive opportunity, identifying the right solutions and

scaling-up energy access efforts sufficiently enough to meet the set goals

Mini-grid solutions

• Potential for scale-up in energy services: beyond basic needs

• Tap into diverse resources (including hybrid systems)• Long-term alternative to fossil-fuel, grid-based options• Centralised ownership, financing and O&M

Enabling environment for off-grid RE deployment

Source: IRENA

Policy and Regulatory Frameworks

Supporting the development of a ‘sustainable’ market

Ensuring that systems deployed are able to operate efficiently and reliably and

leveraging on local enterprises and capacities that contribute to improved sustainability in

the first place, but also promote local ownership and also allow retention of value locally

(jobs, income, know-how, etc.) – Capacity Building and Technical Assistance are crucial.

Integrating off-grid renewables into the national rural electrification strategy (

Grid- where and when?

Identifying areas to be covered through grid extension or off-grid solutions

Informing communities of real time frames for grid arrival

Stable policy frameworks

Several rural electrification programmes have succeeded after years of learning and

course correction

Policies, including support schemes, need to be tailor-made and dynamic

in order to effectively and efficiently support the growing market

Flexible tariff-setting for mini-grid projects to allow commercial viability

‘What happens to the mini-grid when the grid arrives’?

Different regulatory options are available

It should be clarified at the initial stage

Encouraging innovation

In technology design, financing and business models

Role of fossil fuel subsidies

Standards (safety and quality)

Safety

Quality

Institutional Framework

Clearly defined roles and responsibilities of different institutions. This helps

give developers certainty about administrative procedures and institutional

interlocutors

Minimised and streamlined administrative procedures. This reduces the

transaction costs incurred by developers, for instance in procuring licenses,

permits or financial support

Ensuring institutions have the necessary capacity (technical, financial and

human) to effectively design and implement the rural electrification strategies

based on off-grid RE

Cooperation and coordination between national and international (public,

financing, research, etc.) institutions involved in rural electrification as well as in

other areas (taking into consideration synergies between access to electricity

and many other sectors)

Financing and Business Models

What are the three most critical challenges for the uptake of off-grid RE?(as % of total respondents)

Source: IOREC Survey

Financing and Business Models

Stand-alone solutions Customised financing schemes Outreach to rural areas Stringent quality control and aftersales service Leveraging technology platforms

Mini-grid solutions Different financing needs at different project phases Tariff design Leveraging local enterprises and capacities PPPs (e.g. public sector financing the local grid and other ‘non-generation’ assets) Productive uses

Bridging the financing gap and ensuring sustainability Combination of different support instruments Effective ‘source to end-use’ financing delivery mechanisms De-risking mechanisms

12

Perception of technology as a challenge

Public sector perspective

Private sector perspective

Source: IOREC Survey

What are the three most critical challenges for the uptake of off-grid RE?(as % of total respondents)

Off-grid RE Technologies

• Awareness about characteristics, reliability and real-world project

costs of off-grid RE solutions

• Integration of innovative technologies in system design

(mobile payment, smart metering and remote control, etc.)

• Standards and quality assurance mechanisms crucial to avoid a situation

of ‘market spoilage’

• Power variability and grid stability

• Electricity storage: a key factor

Thank you

Salvatore Vincisvinci@irena.org